Local SMEs plan to increase exports outside Asia Pacific

TWO out of three small and medium enterprises (SMEs) in the Philippines are planning to continue or increase their export activities beyond Asia Pacific within the next 12 months, according to a study commissioned by FedEx Express.

The study “Global is the New Local,” which focused on the changing international trade patterns of small businesses in Asia Pacific, was based on interviews with senior executives of more than 4,500 SMEs (including 500 from the Philippines) between March and April 2018.

Based on the report, majority or 67% of SMEs in the Philippines aim to increase their exports outside Asia Pacific for the next 12 months, while 56% say they will raise exports within the region.

The FedEx Express study showed exports accounted for the bulk (89%) of the SMEs’ total annual revenues with a combined value of $1.4 billion, above the Asia Pacific average of 71%.

Majority of SMEs surveyed (69%) currently export within Asia Pacific, particularly China, Singapore and Hong Kong. More than half of the SMEs (53%) export outside Asia Pacific, with India and the United States the top markets.

The report also showed SMEs source 41% of supplies abroad, with some respondents noting the higher quality of imported materials.

Around 55% of SMEs surveyed anticipate the value of their imports to rise further in the coming year.

However, the FedEx Express study cited local SMEs’ most common challenges are — customs procedures (66%) and logistics issues (53%) in both exports and imports.

E-COMMERCE

At the same time, the study showed 96% of SMEs in the Philippines use e-commerce, which generate 52% of their total revenues.

Majority (73%) of Philippine SMEs expect their e-commerce business to increase in the next year. The study also showed 89% of the SMEs are using mobile commerce, with 74% saying they see higher mobile commerce revenues in the next 12 months.

Social media is likewise being used as a tool by 95% of SMEs surveyed, which they say account for 48% of their revenues.

“When I look at the results from the survey, it says that over 90% of SMEs are using either e-commerce, mobile commerce or social commerce,” FedEx Express Managing Director for the Philippines John D. Peterson said in a media briefing in Makati City on Thursday.

“The SMEs in the Philippines are now competing against SMEs in France, SMEs in Vietnam. So you want to make sure that the platforms they have are competitive so they can continue to compete,” he added.

Mr. Peterson noted mobile commerce is important in helping SMEs, particularly in the Philippines where government data shows 77.4% don’t have access to bank accounts.

“These mobile payments are allowing young entrepreneurs that don’t have bank accounts to be able to access market that they normally wouldn’t be able to reach. So what I would say is, what the study has found is SMEs in the Philippines are embracing the new technologies at a very high rate,” he said.

“The Philippine SMEs are embracing the technology. It’s giving them now a level playing field…. It’s breaking down the borders and allowing the cross border trade from the Philippines,” Mr. Peterson added. —